But two economists issued a warning Monday of a renewed recession if the government continues to restrict spending — particularly with the sharp tax increases and spending cuts scheduled for early next year.
President Barack Obama and congressional Democrats are seeking a deal with Republicans to replace the upcoming "fiscal cliff" -- the nickname given to simultaneous tax hikes and spending cuts scheduled for the end of the year -- with smaller tax hikes and spending cuts.
The dispute had threatened to kill a $790 billion defense and security spending package scheduled for a vote this week.
The calculation also gave Mr. Obama credit for automatic spending cuts scheduled for the next fiscal year, which the president opposes and which may not actually take effect.
TAX increases and federal spending cuts scheduled for the end of 2012 could lop off nearly four percentage points of annual economic growth, according to government and private estimates.
Both social issues are embedded in military spending legislation scheduled for debate on the floor of the Senate by the middle of the week.
We are generally feeling poorer than we used to, even before the tax increases and spending cuts scheduled for 6 April.
The $110 billion in across-the-board federal spending cuts scheduled for March 1, for example, might provoke layoffs by local governments, military contractors and other companies that depend on federal funds.
Even without all of the federal tax increases and spending cuts scheduled for 2013, the government sector will slow growth because state and local governments are still shrinking, said Michael Feroli, chief United States economist for JPMorgan Chase.
The only thing more heated than the policy debate over the series of automatic tax increases and spending cuts scheduled for Jan . 1is the vigorous semantic debate over what to call it, Annie Lowrey writes.
By the same logic, the $600 billion of revenue increases and spending cuts scheduled for next year — the so-called fiscal cliff — would have large negative effects on demand, output and employment and would reduce future potential output as well.
